As modified by defendant's attorney, the purported settlement agreement
contained the following terms:

"1. Cannon Beach Property

"[Defendant] would transfer the property back to [plaintiff] and
would take a deed of trust on the property, with a due on sale clause.
[Plaintiff] would then be responsible for the back taxes owed and for the
actual invoiced cost of the geotechnical work-up on the property which
would be added to the principal balance of the note. Any attorneys' fees
incurred by [defendant] specifically in connection with efforts to develop
and sell the property would be reimbursed by [plaintiff], upon confirmation
of the nature of the services rendered from time entries, also by adding to
the loan balance. He would have until the end of the forbearance agreement
(30 days after final resolution of the Baypack v. Nelbro action, including
any appeals) to obtain at his cost and expense engineering and geologic
recommendations, building permits, etc. and/or to obtain a binding purchase
and sale agreement from a qualified buyer through a realtor of his choice.
[Plaintiff's] proposal with respect to the above is conditioned upon
confirmation that the re-conveyance of the property under these
circumstances would not be deemed a sale for purposes of the listing
agreement between [defendant] and his realtor, which is also a condition of
[defendant].

"2. [FISHING VESSEL] SANDMAN

"[Defendant] would agree not to foreclose on the first preferred
mortgage he holds on the vessel until default under the note. [Plaintiff]
would be free to sell the vessel at any time prior to that date, the first
$150,000.00 of which would be paid to [defendant] in satisfaction of his
mortgage[,] to a disinterested third party. Any sale of the vessel by
[plaintiff] on terms would include the usual protections for a mortgagee,
such as an assignment of sale proceeds, naming [defendant] as a loss payee
on the vessel's hull and machinery policy, etc. In the event of any sale on
terms the mortgage shall remain a lien on the vessel until first $150,000
paid, unless otherwise agreed by [defendant].

"3. Petersburg Property

"[Plaintiff] would grant to [defendant] a deed of trust on Lot 8, with
a due on sale clause.

"4. Baypack v. Nelbro Chose in Action

"[Plaintiff] would grant to [defendant] a security interest in his right
to any recovery in the above-referenced action, and will warrant that right
has not been assigned, pledged, etc.

"5. Loan Extension Fee

"In consideration of the above, [plaintiff] would pay a loan extension
fee of $25,000.00, which would be added to the principal balance of the
Note.

"6. [Plaintiff] to pay attorney's fees and costs of [defendant] in
connection with loan modification, restructuring * * *, provided that fees
under 1. and 6. not to exceed $12,500, to be added to Note balance.

"7. The Promissory Note

"The promissory note would be modified to reflect the new maturity
date, as indicated above, and the new principal loan balance, which would
include the $25,000.00 loan extension fee. Also modified to confirm cross-collateralization and that default under any security instrument is default
under Note."

The parties' attempts to memorialize the purported settlement agreement in
a more formal and detailed document failed miserably. Plaintiff insists that defendant's
attorneys repeatedly attempted to force him to accept terms that were not part of the
original agreement, such as an increase in the interest rate on the note. Defendant insists
that plaintiff rejected his attempts to memorialize the agreement without ever specifying
what the points of disagreement were.

For our purposes, the most important disagreement between the parties
arose over the security interest that plaintiff was to grant defendant in the proceeds of the
litigation between Baypack Fisheries and Nelbro (Nelbro litigation). According to
defendant, after the exchange of documents that constitute the settlement agreement, he
learned that plaintiff was not in fact a party to that litigation. Thus, defendant wanted a
security interest in plaintiff's membership in Baypack Fisheries, LLC, as well as in his
shares of Professional Fisherman's Association, Inc., a corporation that itself was a
member of Baypack Fisheries. Plaintiff refused to grant defendant such an interest and
instructed his attorneys to add the existence of the settlement agreement as an affirmative
defense to defendant's counterclaim seeking judicial foreclosure.

After a bench trial, the court held that the parties had reached a general
agreement to extend the term of the loan but disagreed on material terms. Those
disagreements, in the view of the trial court, rendered whatever agreement the parties had
reached incapable of specific performance.

The court focused on two terms on which the parties disagreed. First, the
court held that it could not enforce the settlement agreement without drafting a security
agreement, and the parties disagreed as to the form of the security interest that would be
the subject of that agreement. Second, the court held that the parties' disagreement over
whether plaintiff had to provide title insurance along with trust deeds on the Cannon
Beach and Petersburg, Alaska, properties made the purported loan extension agreement
incapable of specific performance. Thus, the court held that the settlement agreement
was not a defense to defendant's counterclaim for judicial foreclosure and entered the
judgment from which plaintiff appeals.

This action is in effect an action for specific performance of a contract and
thus is equitable in nature. Our standard of review is de novo; we shall try the cause anew
upon the record. ORS 19.415(3) (2001). The underlying loan agreement states that the
agreement between the parties shall be governed by the law of the State of Washington,
and both parties agree on this point. Thus, we apply Washington law. M+W Zander v.
Scott Co. of California, 190 Or App 268, 272, 78 P3d 118 (2003).

As discussed above, the trial court held that the parties disagreed as to
material terms of the settlement agreement--specifically, the form of the security interest
in plaintiff's rights to the proceeds from the Nelbrolitigation and the question of title
insurance on the trust deeds--and concluded that the agreement therefore could not be
specifically enforced. We agree that the settlement cannot be specifically enforced, but
for a different reason. As we see it, even assuming that the parties agreed on the material
terms of the settlement, plaintiff was not able to perform his obligation under the
agreement at any relevant time. Hence, he cannot seek specific performance of the
agreement. Plaintiff could not perform for the simple reason that, as defendant pointed
out to the trial court, plaintiff had no rights in the collateral in which he promised to give
defendant a security interest.

The settlement agreement provided that "[plaintiff] would grant to
[defendant] a security interest in his right to any recovery in the [Nelbro litigation], and
will warrant that right has not been assigned, pledged, etc." It is clear that the parties
intended this to be an enforceable security interest, as it was intended to secure a large
and growing debt. Regarding the discussions that led to the agreement, one of
defendant's attorneys testified at trial that

"[Nelbro] was the deal. I mean, that was the whole reason. If [Nelbro]hadn't been out there as a, you know, possible source of payment, I don't
think we would have even had these discussions. Everybody was expecting
to get paid out of the [Nelbro]. * * * Without that there, I think we all were
up the creek."

As discussed below, plaintiff still maintains that he can grant an enforceable security
interest to defendant. Thus, both parties intended for the security interest to be
enforceable.

Under Washington law, a security interest does not attach and is not
enforceable until the debtor has rights in the collateral. RCW 62A.9A-203. Because the
settlement agreement contemplated an enforceable security interest, it contemplated that
plaintiff actually had rights in the collateral, that is, "his right to any recovery" in the
Nelbro litigation. However, plaintiff had no right to any recovery in that litigation and
thus could not grant to defendant an enforceable security interest.

Plaintiff insists that all he had to do to perform his promise to provide a
security interest was to sign and file a Uniform Commercial Code financing statement
granting defendant a security interest in his right to any recovery from theNelbro
litigation. At trial, plaintiff's attorney testified that, as a member of the limited liability
company that was a party to the litigation and as a creditor of that same company, plaintiff
had an expectancy in the proceeds of the litigation that was a "general intangible" under
the law of secured transactions. However, because plaintiff himself was not a party to the
litigation, he had no rights in the proceeds of the litigation at all.

Baypack Fisheries, LLC, is a Washington limited liability company, and,
under Washington law, a member of a limited liability company "has no interest in
specific limited liability company property." RCW 25.15.245. Thus, plaintiff's status as a
member of the limited liability company gave him no rights in the proceeds of the
litigation.

Plaintiff's status as a creditor is no help to him either, for it gave him no
vested interest in any particular asset of the company. One of his attorneys testified at
trial that plaintiff had promissory notes from the company, evidencing the company's debt
to him. Those notes are not in the record. Even assuming their existence, nothing in the
record indicates that those notes were secured by any particular collateral, such as the
proceeds from theNelbro litigation. Thus, the notes do not show that plaintiff had any
right to the proceeds of that litigation. For plaintiff to pledge those notes as security for
his debt to defendant would be to offer defendant materially different collateral from that
promised in the settlement agreement.

Plaintiff relies heavily on evidence regarding the existence of a corporate
resolution passed by Baypack Fisheries that states that the company will pay defendant
first from the proceeds of the Nelbro litigation; he argues that such a resolution should
suffice to satisfy defendant. However, the corporate resolution itself is not in the record.
Even assuming its existence, and that it does in fact state that the company will pay
defendant first out of any recovery in the litigation, it is no help to plaintiff. The
corporate resolution does not purport to give plaintiff any rights to the proceeds of the
litigation, nor does it purport to be irrevocable. That is, the company could resolve at any
time not to pay defendant first from the proceeds.

In sum, plaintiff could not grant defendant a security interest in his right to
any recovery from the Nelbro litigation because he had no such right. Thus, neither at the
time of the execution of the settlement agreement, nor at any time during the course of the
trial, could plaintiff perform his obligations under the agreement. For that reason, he
cannot ask a court to require defendant specifically to perform defendant's obligations
under the parties' agreement.

To obtain specific performance, a party must be ready, willing, and able to
perform his own obligations. As the Washington Supreme Court has explained:

"It is a fundamental doctrine of courts of equity that neither party to a
contract will be permitted to enforce it specifically against the other, until
he has shown that he has done, or offered to do, or is ready and willing to
do, every material act or thing required of him by the agreement at the time
of commencing the action, and also that he is ready and willing to do all
acts required of him in the execution of the contract in accordance with its
terms and conditions. * * * And this doctrine is but the application of the
maxim, 'He who seeks equity must do equity.'"

Wintermute v. Carner, 8 Wash 585, 587-88, 36 P 490, 491 (1894). To support that
proposition, the court cited section 323 of Pomeroy's Treatise on the Specific
Performance of Contracts As It Is Enforced by Courts of Equitable Jurisdiction in the
United States of America. In section 330 of that treatise, Pomeroy observes:

"The party seeking aid of the court * * * must not only show that he has
complied with the terms, so far as they can and ought to be complied with,
at the commencement of the suit; he must also show that he is able, ready
and willing to do those other future acts which the contract stipulates for as
a part of its specific performance."

John Norton Pomeroy, A Treatise on the Specific Performance of Contracts As It Is
Enforced by Courts of Equitable Jurisdiction in the United States of America § 330, 726
(3d ed 1926). Thus, it is well settled that a plaintiff cannot obtain specific performance
unless he is able to comply with the terms of the contract on which he relies. Coonrod v.
Studebaker, 53 Wash 32, 36-37, 101 P 489, 490-91 (1909); accord Percy v. Miller et al.,
197 Or 230, 239-40, 251 P2d 463 (1952) ("[A] plaintiff coming into equity for specific
performance must show not only that he has a valid, legally enforceable contract, but also
that * * * he is ready, able, and willing to perform his obligations under the contract, in
their entirety * * *."); Voin v. Szabo, 139 Or App 590, 593-94, 913 P2d 717 (1996),
review dismissed as improvidently allowed, 325 Or 247 (1997) (same); Specific
Performance, 81A CJS 253 § 79 (2004); Specific Performance, 71 Am Jur 2d 81-82 § 77
(2001).

Here, although he may be willing, plaintiff is neither ready nor able to grant
defendant a security interest in his right to any recovery in theNelbro litigation. Plaintiff
testified at trial, and reiterated in his brief to us, that he has "always been ready, willing
and able to perform" his obligations under the settlement agreement. However, as
discussed above, the record shows that plaintiff was unable to perform because he had no
rights in the collateral in which he promised to grant defendant a security interest.
Because plaintiff is unable to uphold his end of the bargain, a court cannot order
defendant to specifically perform his obligations.

Affirmed.

1. Plaintiff's initial action was dismissed without prejudice when it appeared that the
parties had reached another settlement in early 1999. That settlement also ultimately failed, and
plaintiff refiled his action to enjoin the sale of the Cannon Beach property. Defendant filed a
counterclaim for judicial foreclosure of the mortgage, and plaintiff raised the August 1998
purported settlement as a defense to the foreclosure.